Estimating the Time and Cost for QuickBooks Online Cleanup
Cleaning up a client’s financial records on QuickBooks Online can be a daunting task, especially when the books are in a complete state of disarray. I’m currently working with my first client, whose financials are nothing short of chaotic. They’ve journeyed from launching a food truck in 2022 to transitioning into a brick-and-mortar establishment by 2023. Now, their General Ledger (GL) consists of approximately 16,000 line items as of June 2024. Adding to this, their credit card transactions are yet to be entered, which could easily contribute another 3,000 lines.
Having already assessed their situation, it’s likely that they may need to re-file their 2022 and 2023 taxes. However, before we approach the CPA who allowed these filings to proceed as they are, we need to untangle this mess and get to the root of their financial standing.
Estimating Cleanup Time and Cost
I’m reaching out to gather opinions on the potential time and cost required to sort through this complex financial scenario. Any insights or personal experiences shared would be immensely helpful.
Below is a brief overview of some of the major issues discovered so far, although there are several more to address:
- POS Issues: Daily sales journals posted by the POS system; confusingly, sales are being recorded as Cost of Goods Sold (COGS), while deposits are logged as sales.
- Double COGS Entries: Both bills and bill payments are inadvertently hitting COGS twice.
- Owner Compensation Misclassification: Owner’s pay is incorrectly reported as labor costs without proper tax consideration, as they did not receive a W-2.
- Inventory Oversights: No entries or adjustments related to food, alcohol, or merchandise inventory are present on the balance sheet.
- Credit Card Misentries: Purchases made via credit cards are missing; instead, payments are inaccurately categorized under “Short Term Business Loans.”
- Loan Mismanagement: No initial balances or interest postings have been recorded for various loans.
- Asset Misreporting: Only one asset—the actual food truck—has been accounted for in the FFE (Furniture, Fixtures, and Equipment) account.
- Brick-and-Mortar Purchases: Major acquisitions made during the transition to a brick-and-mortar location haven’t been included in the FFE account.
The task ahead is immense,
One response
Cleaning and organizing books in QuickBooks Online (QBO), especially when they’re in disarray, can be a time-consuming task. Given the complexity and volume you’ve described, let’s break down the process into detailed steps and provide an estimation of both time and cost:
Key Areas to Address
Duplicated Bill Entries: Identify and correct any duplicated entries affecting COGS.
Owner’s Pay and Labor Costs
Reclassify any owner payments improperly logged as labor costs and ensure compliance with tax filing for any unreported earnings.
Inventory and Balance Sheet Adjustments
Audit the absence of inventory on the balance sheet. Enter any adjustments needed to correctly reflect inventory items such as food, alcohol, and merchandise.
Credit Card Transactions
Enter approximately 3,000 credit card transactions, ensuring they’re correctly categorized, especially if they were mistakenly booked as liabilities.
Loans and Interest
Establish correct loan opening balances and calculate and enter any accrued interest.
Fixed Assets
Estimation of Time
Given your description, this type of cleanup can be extremely labor-intensive. Let’s break it down:
Total Estimated Time: 102-152 hours
Estimated Cost
The rate can vary based on the professional’s experience and region, but here are general benchmarks:
Thus, the total cost estimation is as follows: